Let government fund health care and insurance companies run show

CUMBERLAND — On Sunday, the Portland Press Herald editorial board excoriated Maine’s 2nd District U.S. representative, Bruce Poliquin, for voting in favor of the House health care reform bill, the American Health Care Act. I believe this criticism is misguided and, sadly, representative of how far apart both sides of the political aisle are on reformation of the non-group health insurance market.

Campaigning for his wife in Flint, Michigan, last October, Bill Clinton said the following with regard to the Affordable Care Act: “The people that are getting killed in this deal are small-business people and individuals who make just a little too much to get any of these subsidies. Why? Because they are not organized; they don’t have any bargaining power with insurance companies, and they’re getting whacked. So you’ve got this crazy system where all of a sudden 25 million more people have health care and then the people that are out there busting it – sometimes 60 hours a week – wind up with their premiums doubled and their coverage cut in half. It’s the craziest thing in the world.”

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In short, it is safe to say that the political left and the political right agree that the ACA is a disaster. The disagreement lies over how to reform it. But before delving into the disagreement, let’s take a brief look at the American health insurance market in the aggregate.

The market can be broken down as follows: group (employer-based and Medicaid, Medicare and other public), non-group and uninsured. According to the Kaiser Foundation, at year-end 2015 there were 268 million individuals covered by group insurance, 22 million by non-group insurance and 29 million uninsured. (Please keep in mind that health insurance data are fickle; thus, there are puts and takes to this analysis.)

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For all of its complexity, the goal of the ACA was simple: Reduce the uninsured rate. Again, according to Kaiser, from 2013 to 2015 the uninsured rate dropped from about 13 percent to 9 percent. Mission accomplished? As Bill Clinton succinctly outlined last fall, the ACA reduced the uninsured rate at the expense of the non-group health insurance market – that whole “you can keep your plan” thing. So the answer is, yes and no.

Back to the disagreement. In simple summary, Sen. Bernie Sanders, representative of the political left, favors 100 percent federal government funding and implementation, while the House Freedom Caucus, representative of the political right, favors 100 percent free market funding and implementation. Both sides are right, and both sides are wrong.

The federal government exists for one purpose: To serve its citizens where the free market cannot. National security, public infrastructure, social safety net and environmental protection, for example. This is because the free market operates within a “return on investment” framework; and when the free market cannot earn an appropriate return, it simply steps aside. But by design the federal government is bureaucratic, slow-moving and, thus, terrible at implementation.

The funding-versus-implementation tension is demonstrated well by the ACA. The federal government successfully expanded coverage by funding Medicaid expansion, but it dramatically altered, to the negative, the economics of the non-group health insurance market by forcing a centrally designed, one-size-fits-all structure onto state insurance markets.

So what is the bipartisan solution? Simple: Let the federal government fund it, and the free market run it.

Back to Poliquin’s vote. Legislation must originate in the House, and because of the Republican majority and a large bloc of House Freedom Caucus votes, by definition the bill had to start well to the right in order to have even a chance of making it to the Senate. As such, criticism of House members’ voting to move the bill out of the starting blocks is sharply misplaced.

The AHCA in current form fails to expand coverage, but the bill goes a long way toward deregulating the non-group health insurance market. As demonstrated by Maine moderate U.S. Sen. Susan Collins on ABC’s “This Week,” criticism should be laser-focused on moving the AHCA to the left on the funding side. But Collins takes it a step further, telling “This Week”: “My goal is to actually expand coverage for those 28 million Americans who still lack coverage today despite the ACA.”

Sen. Collins is 110 percent accurate. According to The New York Times, in 2015 the United States spent about $7,200 (federal and state) per Medicaid recipient. At this level, it would cost the federal government about $202 billion, or just over 1 percent of gross domestic product, to expand coverage to the 28 million Americans without health insurance. Let the federal government fund it, and the free market run it.

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